What price a prime minister?

What price a prime minister? After a pay rise that came into force today, the answer for the first time is half a million dollars. Kevin Rudd wasn't the only beneficiary. All federal MPs received a boost. The base salary of an average backbencher now stands at $195,000. Do we get what we pay for?

Transcript

icon-plusicon-minus

PETER LLOYD: What price a prime minister? After a pay rise that came into force today, the answer for the first time is half a million dollars.

Kevin Rudd wasn't the only beneficiary. All Federal MPs received a boost. The base salary of an average backbencher now stands at $195,000.

Do we get what we pay for?

James Glenday reports.

JAMES GLENDAY: Almost every time politicians get a pay rise, there's a flurry of tabloid news stories.

AMANDA VANSTONE: Let's kick the pollies. I mean, it's an easy, easy target. It's very hard to get a rational debate on that sort of thing.

JAMES GLENDAY: Amanda Vanstone was a minister in John Howard's cabinet. She says senior figures in the Government and Opposition work ridiculously hard and earn much less than those in big businesses.

AMANDA VANSTONE: Politicians are notoriously weak at arguing the case for their own increases.

JAMES GLENDAY: The average full-time Australian worker earns about $72,000 a year. Today's wage increase boosts the typical federal backbencher's base salary to just over $195,000. That's hardly peanuts, but if we paid politicians less, would we end up with monkeys?

TIMOTHY BESLEY: Well I think that's a bit rough on our political class. I think often it's people who are strongly motivated towards wanting to make a contribution.

JAMES GLENDAY: However, Professor Timothy Besley from the London School of Economics says recent research suggests pay does make a difference to the qualifications of politicians and how long they stay in parliament.

TIMOTHY BESLEY: One consequence of not paying politicians in a serious way is that they drop out. You pay less, you get less good people. If you pay below the market price, you will simply not attract the people you want to attract. That's where I think the research says you've got to make that decision sensibly.

JAMES GLENDAY: So what is the market price? In Singapore the prime minister earns over $1.5 million a year.

CHRISTOPHER KAM: Oh, I would never pay them that much. I would never pay them that much.

JAMES GLENDAY: Associate Professor Christopher Kam from the University of British Columbia in Canada believes the quality of politicians relates to how their wages compare with the rest of society. He says a study in Brazil found giving local councillors a middle class wage made a big difference, but in Canada significant pay rises didn't.

CHRISTOPHER KAM: MPs in Canada are fairly well paid. They make $160,000 a year. That doesn't place them in the 1 per cent in the income distribution, but it places them well within the 2 or 3 per cent. What this means is that if you give a MP in Canada a $10,000 or $15,000 raise, it doesn't really change their position relative to the rest of the economy.

JAMES GLENDAY: Last year, Australian politicians gave up perks and the ability to block or approve pay rises and retiring federal independent Rob Oakeshott says it was a good first step.

ROB OAKESHOTT: I do think it's fair and in the end it's outside, you know, it's not politicians making these decisions. There is a tribunal. It does comparisons to other sectors.

JAMES GLENDAY: Though he says after the events of the tumultuous 43rd Parliament, introducing key performance targets and linking them with pay increases could be one way of rewarding hard work.